Weekly Trader's Outlook

If you read the last week's blog, you might recall that I had a "Volatile with a Slightly Bullish tilt" forecast for this week, noting the relative strength in the price action (vs. oil prices) in the back half of last week. Stocks rocketed this week, on track for the best weekly gains since last year, following Tuesday's news that the U.S. and Iran agreed to a two-week ceasefire, less than two hours before U.S. President Donald Trump's deadline to open the Strait of Hormuz or suffer attacks on Iran's energy infrastructure. Subsequent to the ceasefire announcement, Iran expressed disdain over attacks on Lebanon and felt the U.S. violated the terms of the agreement. Earlier today, Iran parliament speaker Mohammad-Bagher Ghalibaf posted on X that two conditions must be met before negotiations with the U.S. can take place—a ceasefire in Lebanon and the release of Iran's blocked assets. There were reports that negotiation talks will take place in Pakistan on Saturday but it's unclear whether an Iranian delegation will be attending at this time. Therefore, while markets are reacting as if a resolution is likely in the coming weeks, there still appears to be a lot of issues to sort out before declaring the end to the war. For reference, WTI crude was last seen trading up 0.88% to $98.73/barrel, which is a greater than 10% drop from last Thursday's close above $111/barrel.

Outside of geopolitics, this morning's March CPI report was warm on the headline figures, primarily due to higher energy prices, but core CPI was slightly cool (more on this in the "Economic Data, Rates & the Fed" section below). Money flowed back to semiconductor stocks on this week's market rebound, and the PHLX Semiconductor Index (SOX) is trading at fresh all-time highs this morning. Money fled out of software stocks on renewed artificial intelligence (AI) disruption concerns as the iShares Expanded Tech-Software Select ETF (IGV) is trading at the lowest levels since October of 2023 today.

At the time of this writing (2:37 p.m. ET) stocks remain mostly in the red, though well off the lows of the session (DJI - 179, SPX - 14, $COMP - 55, RUT + 5). No doubt, this was a bullish week for stocks, fueled by a belief that a peaceful resolution to the Iran war is near, and therefore a relatively subdued path forward for oil prices. Of course, that is no guarantee, and if markets have knee-jerk reacted on too much hope, we'll likely be due for a pullback in stocks in the coming weeks. In my view, the reason investors have been eager to buy the dip is because: a) S&P earnings per share (EPS) growth forecasts have been moving higher over the past couple weeks; b) the AI secular growth story remains intact; and c) there is a tendency to compare the Iran war to Trump's "Liberation Day" tariffs or the Russian invasion of Ukraine, both of which resulted in a market recovery. It's possible that the March 30th 6,316 low in the SPX turns out to be the bottom, but uncertainty is still elevated and it's probably prudent to hold some investment skepticism for now. Aside from the Iran war, the indices achieved substantial technical healing this week, which also provides psychological healing for investors—when you are caught in a downtrend or making fresh lower lows every week, investors are much less willing to step in and provide bid support. However, I'll point out that the indices are near-term overbought, so at least some consolidation should be anticipated at some point next week. We're also going to unofficially kick off Q1 earnings season with the big banks on Monday/Tuesday, so the corporate commentary/guidance will be in focus (even if company's use the Iran war as an excuse to forgo specific forward guidance). Regardless, the progress in U.S./Iran negotiations, or lack of it, will likely be the primary determinant of whether stocks are higher or lower by next Friday. If the two countries can just make any positive movement towards a resolution, I would guess stocks are higher next week, but I don't think that's possible to predict. And while the Cboe Volatility Index (VIX) is up 3% today, at a level of 20, I feel like it could be underappreciating the potential for volatility to re-introduce itself. Therefore, I'll provide a "Higher Volatility, Choppy" forecast for next week, as I expect Middle East headlines to primarily steer Wall Street. In the absence of the uncertainty around the war, I would have likely put a "Slightly Bullish" forecast for next week, noting expectations for healthy earnings reports and technical improvement.

• Monday (April 13): Existing Home Sales
• Tuesday (April 14): Producer Price Index (PPI)
• Wednesday (April 15): EIA Crude Oil Inventories, Empire State Manufacturing, Export Prices, Import Prices, MBA Mortgage Applications Index, Net Long-Term TIC Flows
• Thursday (April 16): Capacity Utilization, Continuing Claims, EIA Natural Gas Inventories, Industrial Production, Initial Claims, Philadelphia Fed Index
• Friday (April 17): Building Permits, Housing Starts

• Monday (April 13): Goldman Sachs Group Inc. (GS), Fastenal Co. (FAST)
• Tuesday (April 14): BlackRock Inc. (BLK), CarMax Inc. (KMX), Citigroup Inc. (C), Johnson & Johnson (JNJ), JPMorgan Chase & Co. (JPM), Wells Fargo & Co. (WFC)
• Wednesday (April 15): ASML Holdings NV (ASML), Bank of America Corp. (BAC), First Horizon Corp. (FHN), J.B. Hunt Transport Services Inc. (JBHT), Kinder Morgan Inc. (KMI), M&T Bank Corp. (MTB), Morgan Stanley (MS), PNC Financial Services Group Inc. (PNC), Progressive Corp. (PGR)
• Thursday (April 16): Abbott Laboratories (ABT), Alcoa Corp. (AA), Bank of New York Mellon Corp. (BK), FNB Corp. (FNB), ICON PLC (ICLR), Marsh & McLennan Companies Inc. (MRSH), Netflix Inc. (NFLX), PepsiCo Inc. (PEP), Prologis Inc. (PLD), Taiwan Semiconductor Manufacturing (TSM), Travelers Companies Inc. (TRV)
• Friday (April 17): Ally Financial Inc. (ALLY), Autoliv Inc. (ALV), Badger Meter Inc. (BMI), Fifth Third Bancorp (FITB), Regions Financial Corp. (RF), State Street Corp. (STT), Telefonaktiebolaget LM Ericsson (ERIC), Truist Financial Corp. (TFC)

There was a solid dose of economic data for markets to digest this week, highlighted by two monthly inflation readings. As expected, March Consumer Price Index (CPI) at the headline level jumped the most in two years (+0.9%), driven by higher energy prices, but core CPI was muted. Personal Consumption Expenditures (PCE) Prices, the Federal Reserve's preferred inflation gauge, was essentially in line with expectations. However, the Prices Index within the ISM Services hit the highest level since October of 2022. Elsewhere, the third estimate of Q4 gross domestic product (GDP) was revised lower once again and the Atlanta Fed Nowcast for Q1 GDP was also revised lower this week. Here's a breakdown of the reports:

• Consumer Price Index (CPI): The headline CPI rose 0.9% in March, which puts the annual inflation rate at +3.3% (both in line with estimates). However, core CPI rose 0.2% in March, which translates into a +2.6% annual inflation rate (both 0.1% below consensus estimates).
• Consumer Sentiment: The preliminary April sentiment index sank to a record low of 47.6 in March from 53.3 in the prior month and below the 51.6 economists had expected. One-year inflation expectations jumped to 4.8% from 3.8% in the prior month, while five-year inflation expectations rose to 3.4% from 3.2% last month.
• PCE Prices: Increased 0.4% in February, up 0.10% from the prior month but in line with estimates. On an annual basis, PCE inflation advanced 2.8%, the same as the prior month year-over-year (YoY) reading and in line with expectations. Core PCE increased 0.4% in February bringing the annual gain to +3.0% (both in line with estimates).
• Q4 GDP – Third Estimate: The third estimate released by the U.S. Bureau of Economic Analysis revised Q4 GDP down to 0.5% from the prior estimate of 0.7%.
• Personal Income: -0.1% vs. 0.4% est.
• Personal Spending: 0.5% vs. 0.7% est.
• ISM Non-Manufacturing Index: Declined to 54.0 in March from 56.1 in February, which represented a three-year high for the index. The New Orders index climbed to a more than three-year high of 60.6. However, the Prices Index jumped to 70.7, the highest level since October 2022.
• Durable Orders: New orders for U.S.-manufactured durable goods fell by 1.5% in February from the previous month to $315.5B, which was worse than the +0.4% economists were expecting. However, Durable Orders ex-transportation rose 0.8%, which was slight above the 0.7% expected.
• EIA Crude Oil Inventories: +3.08M barrels.
• EIA Natural Gas Inventories: +50 bcf.
• Initial Jobless Claims: Initial applications for U.S. jobless benefits increased 17K from last week to 219K, which was well above the 210K economists had expected. Continuing Claims decreased 38K from the prior week to a seasonally adjusted 1.794M.
• The Atlanta Fed's GDPNow "nowcast" for Q1 GDP was revised down to 1.3% yesterday from 1.6% last Friday.

U.S. Treasury yields didn't see much change from last week but the yield curve experienced some steepening due to modest easing in the two-year. Compared to last Friday, two-year Treasury yields are down ~5 basis points (3.791% vs. 3.846%), while both 10-year yields (4.313% vs. 4.313%) and 30-year yields (4.912% vs. 4.911%) are essentially unchanged.

Market expectations around the Federal Reserve's next move barely budged from last week. It seems that market participants aren't expecting a hike or cut this year, at least not until more is known around the trajectory of oil prices/inflation and the duration of the Iran conflict. Per Bloomberg, the probability of a cut at all 2026 Federal Open Market Committee meetings is below 20%. As it currently stands, the probability of a cut from the Fed doesn't get above the 65% threshold until July of next year.

Last Friday, I noted that the technicals on the PHLX Semiconductor Index (SOX) had shifted into the bullish camp from the prior week. Following this week's potential ceasefire between the U.S. and Iran the money poured into chip stocks, which propelled the SOX to fresh all-time highs. This is a clear indication of where investors want to put their money on bullish market rebounds, perhaps perceiving the "hardware" AI data center plays as those with the most stability in earnings growth. The only fly in the ointment for the bulls is that the index is at or near technically overbought levels on a near-term basis.

Technical translation: Intermediate-term bullish, near-term slightly cautious due to overbought status

The S&P 500 index (SPX) catapulted above the 200-day SMA on Wednesday on ceasefire talks and the index has experienced some subsequent follow-through upside, which has placed it above the 50-day SMA. If the SPX closes higher today it would be the eighth consecutive day of gains. In addition, a positive close would put the index above its 100-day SMA, which would be technically bullish. Are we near-term overbought? Yes, even though the RSI remains below the 70-level—I consider it overbought because the RSI has surged from under 30 to 60 in eight trading days. On a very near-term basis, it wouldn't surprise me to see some consolidation on Monday/Tuesday, but it also wouldn't surprise me if the SPX is net higher by next Friday (of course, that's likely contingent on the status of ceasefire talks between the U.S. & Iran).

Technical translation: Intermediate-term bullish, near-term slightly cautious

The Bitwise 10 Large Crypto Index is up 9% week-over-week, with bitcoin up 9% and ether up 10% at the time of writing this on Friday. Bitcoin may be known for its high volatility; however, following the bear market that began in October, it has recently exhibited attractive risk/reward relative to the S&P 500.

Over the past year, on up days, the S&P 500 has risen 0.68% on average, while bitcoin's average move on those days was 1.01%. On down days, the S&P 500 fell 0.64% on average, with bitcoin falling 1.38%. After falling nearly 50% from its October 2026 all-time high of $126,000, bitcoin's volatility has decreased. Over the past month, on days when the S&P 500 was down, the index fell 0.89% on average, compared to bitcoin which fell 0.92%. On up days, the S&P 500 rose 0.80% on average, while bitcoin rose 1.20%—a 50% higher return on average for nearly the same level of downside risk. While past performance is no guarantee of future results, this shows that the recent risk/reward for bitcoin has been attractive relative to the S&P 500.

The Bloomberg chart below shows the current percentage of members within the S&P 500 (SPX), Nasdaq Composite (CCMP) and Russell 2000 (RTY) that are trading above their respective 200-day Simple Moving Averages (SMA). In short, stocks jumped this week and market breadth expanded significantly as a result. However, it should be noted that breadth hasn't reclaimed "pre-war" levels yet. Compared to last Friday, the SPX (white line) breadth is up to 57.23% from 48.50%, the CCMP (blue line) moved up to 40.54% vs. 36.42%, while the RUT (red line) improved to 58.03% from 50.42% (all week-over-week).